The star of the show was Microsoft's cloud computing business,
which continued to post strong gains even as its traditional
Windows and Office businesses show signs of struggle.

Microsoft reported:

Earnings per share of $0.84 on an
adjusted basis, versus $0.79 expected.

Revenue of $25.8 billion. That figure
excludes Windows 10 revenue deferrals and results from the
just-acquired LinkedIn, making it a clean beat on the
$25.28 billion expected by Wall Street analysts.

Investors were especially looking to see growth in the company's
crucial cloud computing businesses, as the
Microsoft Azure cloud continues to gain ground on the leading
$10 billion Amazon Web Services juggernaut. That's important, as
the company's revenue from traditional businesses like Windows
and Office continues to stagnate.

And they got it: Revenue from its Productivity and Business
Processes unit, which includes the fast-growing Office 365 cloud
productivity suite, was up 10% from the same period in
2015 to $7.4 billion. While Office 365 revenue was up 47%
from the quarter previous, boxed Office software revenue was down
13%. Microsoft says this is a sign of people abandoning
traditional Office for the internet-delivered model of Office
365.

Notably, LinkedIn contributed $228 million of revenue to the
Productivity unit in the three weeks between the acquisition
closing and the end of the quarter.

Meanwhile, the Intelligent Cloud unit got an 8% boost over the
last quarter, largely thanks to an 93% increase in Microsoft
Azure revenue from the same period in the previous year. A drag
on this unit was the enterprise services business, which dipped
4% over the previous quarter. A good news for investors is that
Microsoft was able to report that usage of Azure was doubled over
the same period in 2015.

Finally, the worst news came out of the More Personal Computing
unit, which dipped 5% from the same quarter in the previous year
to $11.8 billion — not encouraging given that this report
covers the holiday quarter. While Microsoft says that its
business of licensing Windows to PC manufacturers was up 5%, the
revenue from the Xbox-driven gaming business was down 3%.